• Indian Rupee (INR) rises with inflation in focus
  • Indian inflation is set to hold steady
  • US Dollar (USD) rises versus major peers
  • US NFP wage growth slowed

The US Dollar Indian Rupee (USD/INR) exchange rate is falling for a fifth straight session.  The pair fell -0.12% yesterday, settling at 82.17. Today, at 14:30, USD/INR trades +0.54% at 81.72, trading in a range between 81.68 to 82.31.

Inflation in India is expected to hold steady in December and remain within the Reserve Bank of India’s comfort zone for a second consecutive month as cooling food prices offset sticky core inflation.

According to a Reuters poll the consumer price index in India it’s expected to be 5.9% in December year on year, almost unchanged from November’s 5.88%. The RBI’s comfort zone is 2-6%, while the medium-term average is 4%.

Wholesale inflation is likely to have slowed in December to 5.6%, down from 5.85% in November. Falling wholesale inflation usually indicates that retail inflation could also cool going forwards.

The US Dollar is falling against the Rupee but rising against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at +0.1% at the time of writing at 103.19, rebounding from losses yesterday.

The US dollar is pushing higher as investors continue to digest comments from Federal Reserve officials, including Fed Chair Jerome Powell.

San Francisco Fed president Mary Daly warned that the Fed would need to raise interest rates above size percent. Meanwhile, Atlanta peer Raphael Bostic also said that rates need to rise above 5% and would likely need to stay there for some time.

Federal Reserve chair Jeremy Powell while speaking at an event in Sweden, said that the Fed is bracing itself for political resistance as it continues trying to rein in inflation by raising interest rates and hitting growth. whilst his comments didn’t directly mention the Fed’s intentions for rate hikes, it does suggest that the Fed intends to hike rates further.